SET-listed developer L.P.N. Development Plc will push its non-development subsidiaries to take outside jobs and shift to the upper-end segment after a sharp drop in presales and revenue last year.
The company is planning to launch 20 new projects worth a combined 23.5 billion baht in 2017.
Managing director Opas Sripayak said its three subsidiaries, which will start taking non-L.P.N. jobs this year, are Lumpini Project Management Services Co (L.P.S.), Lumpini Property Management Co (L.P.P.) and Lumpini Property Service and Care Co (L.P.C.).
"It will be the first time since our establishment 28 years ago that we will take outside jobs," he said yesterday. "This will help the subsidiaries generate additional income and improve L.P.N.'s profit margin by 1%."
L.P.S., a project management consultancy firm providing property development service for which L.P.N. holds a 99.99% stake, will have other developers to invest in to assure steady income in the future.
Apart from other developers, L.P.S. will also have L.P.N.'s partners, constituting more than 20 firms in the construction business and materials suppliers, as new shareholders. It further plans to increase its registered capital up from 1 million baht at present.
L.P.S. aims to have 190 million baht in revenue this year, up from 130 million last year. The amount will include 140 million baht from L.P.N., 30 million from an affiliate and L.P.N.'s low-rise development subsidiary Pornsanti Co, and 20 million from non-L.P.N. projects.
Property management subsidiary L.P.P., which currently manages only L.P.N. projects totalling 129 sites with over 130,000 units, will start engaging in property management at non-L.P.N. projects.
L.P.P. aims to have 520 million baht in revenue, up from 440 million last year from the management of 158 projects, including 29 new sites with eight L.P.N. projects, six Pornsanti projects and 15 non-L.P.N. sites.
At the same time, cleaning service firm L.P.C. aims to have 340 million baht in revenue this year, up from 300 million last year from 168 projects, including 148 L.P.N. projects and 20 non-L.P.N. projects.
"This year will be a year of shifts," said Mr Opas. "Last year we had problems with low-end customers, who are our main target, due to a high mortgage rejection rate, causing a sharp drop in 2016 presales and revenue."
L.P.N. last year recorded 8.5 billion baht in presales and 13 billion in revenue, down from 15.5 billion and 16.6 billion in 2015, and below its 2016 target of 14.9 and 15.5 billion, respectively.
LPN shares closed yesterday on the Stock Exchange of Thailand at 12.70 baht, down 10 satang, in trade worth 127 million baht.